CMBI published a research report stating that Mainland China's regulators issued the "Notice on Improving the Commercial Housing Sales System" on August 28, proposing to raise the presale threshold for newly built commercial housing to the "structural topping-out" stage, while implementing full supervision of presale funds for newly granted land parcels.

The broker believes that full implementation of the policy will tighten developers' liquidity and extend the capital recovery cycle from 3-6 months to 6-12 months, accelerating the exit of undercapitalized small developers from the market and further driving market share concentration toward state-owned enterprises. On the demand side, the policy could reduce the risks of unfinished projects and delayed delivery, helping boost buyer confidence. CMBI views this as a landmark measure to break the industry's vicious cycle, with regulators directly targeting the root causes of the problem. Investor reaction has been more positive than expected, with focus shifting toward the long-term impact. The policy reinforces themes of supply contraction and market share concentration, placing the industry on a medium- to long-term recovery track with limited downside risks. The broker recommends selective positioning in related stocks.

CMBI believes the reform is a key measure to "exchange short-term pain for the industry's long-term health", directly addressing delivery risks that have eroded buyer confidence and demonstrating regulators' determination to proactively break the industry's vicious cycle. For actively traded state-owned developers, the policy impact should be limited due to lighter cash flow pressure, smooth financing channels and lower funding costs. The broker recommends selectively positioning in quality leading state-owned developers with a high proportion of commercial properties and land reserves in core cities.(ad/u)